Introduction
Salary slip dekh ke confusion hota hai ki kitna tax katega? Ya ITR file karte waqt darr lagta hai ki kahin zyada tax na pay kar dein? You’re not alone! The income tax slab 2026-27 assessment year is something that confuses millions of Indian taxpayers every single year.
But here’s the good news – understanding income tax slab 2026-27 assessment year is actually much simpler than you think. Once you know which slab you fall into, tax planning becomes so much easier. You’ll know exactly how much tax you owe, how to save legally, and most importantly – you won’t pay a single rupee more than necessary!
In this guide, I’ll explain the income tax slab 2026-27 assessment year in the simplest possible way. No CA jargon, no complex formulas – just practical, easy-to-understand information that helps you calculate your tax liability accurately. Whether you’re a salaried employee, freelancer, senior citizen, or business owner, this guide has you covered!
Let’s decode those tax slabs and make tax season stress-free!
Table of Contents
What is Assessment Year and Financial Year?
Before we dive into tax slabs, let’s clear this common confusion first.
Financial Year (FY) 2025-26:
This is the year when you actually earn the income.
- Period: April 1, 2025 to March 31, 2026
- This is when your salary comes, business runs, investments grow
- Your income during these 12 months determines your tax
Assessment Year (AY) 2026-27:
This is the year when you assess and file your income tax return.
- Period: April 1, 2026 to March 31, 2027
- You file ITR for previous year’s income during this period
- ITR filing deadline is usually July 31, 2026
Simple Example:
- Ravi earned ₹8 lakh salary from April 2025 to March 2026 → FY 2025-26
- He will file ITR in July 2026 for that income → AY 2026-27
Remember: When we talk about income tax slab 2026-27 assessment year, we’re referring to the tax rates applicable on income earned in FY 2025-26.
Got it? Great! Now let’s move to the actual tax slabs.
Understanding Income Tax Slab 2026-27 Assessment Year
India has two parallel tax systems operating right now – the Old Tax Regime and the New Tax Regime. You can choose either one while filing your ITR.
Let me break down both systems for the income tax slab 2026-27 assessment year.
New Tax Regime (Default from FY 2023-24)
The new regime offers lower tax rates but with a catch – you can’t claim most deductions like 80C, 80D, HRA, etc.
Income Tax Slab 2026-27 Assessment Year (New Regime):
| Annual Income | Tax Rate |
|---|---|
| Up to ₹3,00,000 | Nil (0%) |
| ₹3,00,001 to ₹7,00,000 | 5% |
| ₹7,00,001 to ₹10,00,000 | 10% |
| ₹10,00,001 to ₹12,00,000 | 15% |
| ₹12,00,001 to ₹15,00,000 | 20% |
| Above ₹15,00,000 | 30% |
Additional Benefits in New Regime:
- Standard Deduction: ₹75,000 (for salaried individuals)
- Rebate under Section 87A: Full tax rebate if income up to ₹7 lakh
- 4% Health & Education Cess applies on total tax amount
What You CANNOT Claim: ❌ Section 80C deductions (PPF, ELSS, LIC, NSC) ❌ Section 80D (Health insurance) ❌ HRA (House Rent Allowance) ❌ Section 24(b) (Home loan interest up to ₹2 lakh) ❌ Section 80CCD(1B) (Additional NPS ₹50,000) ❌ LTA (Leave Travel Allowance) ❌ Professional tax
What You CAN Claim: ✅ Standard Deduction (₹75,000) ✅ Employer’s NPS contribution (Section 80CCD2)
Example Calculation (New Regime):
Priya earns ₹9 lakh per year:
Gross Income: ₹9,00,000
Less: Standard Deduction: ₹75,000
Taxable Income: ₹8,25,000
Tax Calculation:
₹0 - ₹3 lakh: Nil
₹3 - ₹7 lakh: 5% of ₹4 lakh = ₹20,000
₹7 - ₹8.25 lakh: 10% of ₹1.25 lakh = ₹12,500
Total Tax (before cess): ₹32,500
Add 4% Cess: ₹1,300
Final Tax: ₹33,800
Old Tax Regime (Optional – Need to Opt-In)
The old regime has higher tax rates but allows multiple deductions and exemptions.
Income Tax Slab 2026-27 Assessment Year (Old Regime):
| Annual Income | Tax Rate |
|---|---|
| Up to ₹2,50,000 | Nil (0%) |
| ₹2,50,001 to ₹5,00,000 | 5% |
| ₹5,00,001 to ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
For Senior Citizens (60-80 years):
- Tax-free income: Up to ₹3,00,000
For Super Senior Citizens (80+ years):
- Tax-free income: Up to ₹5,00,000
Standard Deduction: ₹50,000 (for salaried)
Rebate under Section 87A:
- Full tax rebate up to ₹12,500 if income ≤ ₹5 lakh
Major Deductions Available:
✅ Section 80C (up to ₹1,50,000):
- EPF, PPF, ELSS, Life Insurance
- NSC, SSY, Tax-Saving FD
- Home loan principal
- Children’s tuition fees
✅ Section 80D (Health Insurance):
- Self & family: ₹25,000
- Parents: ₹25,000 (₹50,000 if senior citizens)
✅ Section 80CCD(1B): Additional ₹50,000 for NPS
✅ Section 24(b): Home loan interest up to ₹2,00,000
✅ HRA Exemption: Based on rent paid
✅ Section 80E: Education loan interest (no limit)
✅ Section 80G: Donations to charity
Example Calculation (Old Regime):
Amit earns ₹9 lakh per year with investments:
Gross Income: ₹9,00,000
Less: Standard Deduction: ₹50,000
Less: Section 80C (EPF+PPF): ₹1,50,000
Less: Section 80D (Health Insurance): ₹25,000
Less: Section 80CCD(1B) (NPS): ₹50,000
Taxable Income: ₹6,25,000
Tax Calculation:
₹0 - ₹2.5 lakh: Nil
₹2.5 - ₹5 lakh: 5% of ₹2.5 lakh = ₹12,500
₹5 - ₹6.25 lakh: 20% of ₹1.25 lakh = ₹25,000
Total Tax (before cess): ₹37,500
Add 4% Cess: ₹1,500
Final Tax: ₹39,000
Comparison:
- New Regime: ₹33,800
- Old Regime: ₹39,000
In Amit’s case, new regime is better by ₹5,200!
But wait! If Amit had HRA exemption of ₹1 lakh and home loan interest of ₹1.5 lakh, old regime would become significantly better!
Internal Link: Confused which regime to choose? Read our detailed comparison guide
Income Tax Slab 2026-27 Assessment Year for Different Categories
Tax slabs aren’t one-size-fits-all! Different categories of taxpayers have different slabs under the old regime.
1. For Individuals Below 60 Years (Resident)
Old Regime:
- Up to ₹2.5 lakh: Nil
- ₹2.5 – ₹5 lakh: 5%
- ₹5 – ₹10 lakh: 20%
- Above ₹10 lakh: 30%
New Regime:
- Same as mentioned earlier (₹3 lakh tax-free)
2. For Senior Citizens (60-80 Years)
Old Regime:
- Up to ₹3 lakh: Nil (₹50,000 higher exemption!)
- ₹3 – ₹5 lakh: 5%
- ₹5 – ₹10 lakh: 20%
- Above ₹10 lakh: 30%
New Regime:
- Same slab as general category (₹3 lakh tax-free)
Special Benefit: Old regime gives ₹50,000 extra tax-free income to senior citizens!
3. For Super Senior Citizens (80+ Years)
Old Regime:
- Up to ₹5 lakh: Nil (₹2.5 lakh higher exemption!)
- ₹5 – ₹10 lakh: 20%
- Above ₹10 lakh: 30%
New Regime:
- Same slab as general category
Special Benefit: Old regime gives ₹2.5 lakh extra tax-free income to super senior citizens!
Example:
Grandmother earns ₹4.5 lakh from pension and FDs:
Old Regime:
Income: ₹4,50,000
Less: Standard Deduction: ₹50,000
Taxable: ₹4,00,000
Tax: NIL (below ₹5 lakh threshold)
New Regime:
Income: ₹4,50,000
Less: Standard Deduction: ₹75,000
Taxable: ₹3,75,000
Tax Calculation:
₹3-3.75 lakh: 5% = ₹3,750
Less: Rebate 87A: ₹3,750
Final Tax: NIL
Both regimes result in zero tax, but old regime was automatically zero while new regime needed rebate calculation.
4. For Hindu Undivided Family (HUF)
Tax Slabs: Same as individual taxpayers (both old and new regime)
HUF is treated as a separate entity and gets the same tax slabs.
5. For NRIs (Non-Resident Indians)
Tax Slabs: Same as resident Indians, BUT:
- No basic exemption benefit under old regime (full tax from first rupee if no other exemptions)
- NRIs can choose between old and new regime
- TDS rates may differ for certain income types
How to Calculate Your Tax Using Income Tax Slab 2026-27 Assessment Year
Let me show you step-by-step how to calculate your exact tax liability.
Step 1: Calculate Gross Total Income
Add up ALL sources of income:
- Salary (Basic + DA + HRA + Special Allowances)
- House property income (rent received or notional rent)
- Business/Professional income
- Capital gains (shares, property, mutual funds)
- Other sources (interest, dividends, etc.)
Example: Rahul’s income:
- Salary: ₹7,50,000
- FD Interest: ₹30,000
- Dividend: ₹10,000
- Gross Total Income: ₹7,90,000
Step 2: Calculate Deductions (Old Regime Only)
If choosing old regime, subtract allowed deductions:
- Standard Deduction: ₹50,000
- Section 80C: Investment amount (max ₹1.5 lakh)
- Section 80D: Health insurance (max ₹25K + ₹50K parents)
- Section 80CCD(1B): NPS (max ₹50,000)
- HRA exemption
- Home loan interest (Section 24)
- Other eligible deductions
Example (Old Regime):
Gross Total Income: ₹7,90,000
Less: Standard Deduction: ₹50,000
Less: 80C (PPF): ₹1,00,000
Less: 80D (Insurance): ₹20,000
Net Taxable Income: ₹6,20,000
Example (New Regime):
Gross Total Income: ₹7,90,000
Less: Standard Deduction: ₹75,000
Net Taxable Income: ₹7,15,000
Step 3: Apply Tax Slabs
Old Regime Calculation:
Taxable Income: ₹6,20,000
₹0 - ₹2.5 lakh: Nil = ₹0
₹2.5 - ₹5 lakh: 5% of ₹2.5L = ₹12,500
₹5 - ₹6.2 lakh: 20% of ₹1.2L = ₹24,000
Total Tax: ₹36,500
New Regime Calculation:
Taxable Income: ₹7,15,000
₹0 - ₹3 lakh: Nil = ₹0
₹3 - ₹7 lakh: 5% of ₹4L = ₹20,000
₹7 - ₹7.15 lakh: 10% of ₹15K = ₹1,500
Total Tax: ₹21,500
Step 4: Apply Rebate (If Eligible)
Section 87A Rebate:
- Old Regime: If taxable income ≤ ₹5 lakh, rebate up to ₹12,500
- New Regime: If taxable income ≤ ₹7 lakh, full tax rebate
In our example:
- Old Regime: Income ₹6.2L (no rebate eligible)
- New Regime: Income ₹7.15L (no rebate eligible)
Step 5: Add Health & Education Cess
Add 4% cess on total tax:
Old Regime:
Tax: ₹36,500
Cess (4%): ₹1,460
Final Tax: ₹37,960
New Regime:
Tax: ₹21,500
Cess (4%): ₹860
Final Tax: ₹22,360
Result: New regime saves Rahul ₹15,600! 💰
Step 6: Adjust TDS and Advance Tax
Finally, check how much tax already paid:
- TDS from salary (Form 16)
- TDS from other sources (Form 26AS)
- Advance tax paid (if any)
If TDS > Final Tax: You get refund! 🎉 If TDS < Final Tax: You need to pay balance before filing ITR
Internal Link: Learn how to file your ITR correctly and claim refunds
Common Mistakes While Understanding Income Tax Slab 2026-27 Assessment Year
Let me save you from these common errors!
Mistake 1: Confusing Gross Salary with Taxable Income
❌ Wrong: “My CTC is ₹10 lakh, so I’m in 30% tax bracket!”
✅ Right: Your CTC includes employer’s PF, gratuity, etc. Actual taxable salary is lower.
Example:
- CTC: ₹10,00,000
- Employer’s PF: ₹60,000
- Gratuity provision: ₹40,000
- Actual Gross Salary: ₹9,00,000
- After deductions (80C, etc.): Taxable = ₹6,50,000 (20% bracket, not 30%!)
Mistake 2: Thinking Higher Slab Means All Income is Taxed at That Rate
❌ Wrong: “I earn ₹6 lakh, so ALL my income is taxed at 20%”
✅ Right: Tax slabs are progressive! Different portions taxed at different rates.
Correct Calculation:
- First ₹2.5L: 0%
- Next ₹2.5L: 5%
- Remaining ₹1L: 20%
You DON’T pay 20% on entire ₹6 lakh!
Mistake 3: Not Considering Standard Deduction
❌ Wrong: Calculating tax directly on gross salary
✅ Right: Always subtract standard deduction first (₹75K new regime, ₹50K old regime)
This alone saves ₹19,500-26,000 in taxes!
Mistake 4: Forgetting the 4% Cess
❌ Wrong: Thinking ₹10,000 tax liability means paying only ₹10,000
✅ Right: Add 4% cess → Actual payment = ₹10,400
Small but important detail!
Mistake 5: Not Comparing Both Regimes
❌ Wrong: Automatically choosing new regime because it’s default
✅ Right: Calculate tax under BOTH regimes every year, then choose better one
Your situation changes annually (new home loan, increased investments, etc.)
Mistake 6: Senior Citizens Not Using Old Regime Benefits
❌ Wrong: Senior citizen choosing new regime without calculation
✅ Right: Old regime gives ₹3 lakh tax-free (vs ₹3 lakh in new regime after standard deduction)
Often old regime is better for seniors with FD income!
Tax Planning Tips Based on Income Tax Slab 2026-27 Assessment Year
Smart tips to legally reduce your tax burden:
If You’re in 5% Tax Bracket (₹2.5-5 Lakh Old / ₹3-7 Lakh New)
Priority 1: Max Out 80C Deductions
- Invest ₹1,50,000 in PPF, ELSS, or EPF
- Saves ₹7,750 in tax (5% slab)
- But: Check if new regime (without deductions) is still better
Priority 2: Health Insurance
- Buy ₹5 lakh cover for family
- Premium around ₹10,000-15,000
- Saves ₹500-750 in tax + gives health coverage
Priority 3: Consider New Regime
- Lower rates may compensate for lost deductions
- Calculate both ways
If You’re in 20% Tax Bracket (₹5-10 Lakh Old / ₹7-12 Lakh New)
Priority 1: Maximize ALL Deductions
- 80C: ₹1,50,000 → Saves ₹31,200
- 80D: ₹50,000 → Saves ₹10,400
- 80CCD(1B): ₹50,000 → Saves ₹10,400
- Total potential savings: ₹52,000+
Priority 2: Home Loan is Your Friend
- Principal goes in 80C (₹1.5L)
- Interest deduction: ₹2L (Section 24)
- Combined benefit: ₹41,600 tax saved
Priority 3: HRA Optimization
- If paying rent ₹15,000/month (₹1.8L yearly)
- HRA exemption can be ₹1-1.5 lakh
- Tax saved: ₹20,800-31,200
Likely Winner: Old regime (with proper planning)
If You’re in 30% Tax Bracket (₹10 Lakh+)
Priority 1: Every Deduction Counts
- Each ₹1 lakh deduction saves ₹31,200!
- Maximize 80C + 80D + 80CCD(1B) + HRA + Home loan
- Total deductions possible: ₹5-6 lakh
- Tax saved: ₹1,56,000-1,87,200 🤑
Priority 2: Tax-Efficient Investments
- ELSS over traditional mutual funds (80C benefit)
- Equity investments (LTCG ₹1.25L tax-free, then 12.5%)
- PPF (completely tax-free)
Priority 3: Family Tax Planning
- Clubbing provisions: Gift to spouse carefully
- HUF formation (if applicable)
- Parents’ health insurance (₹50K deduction)
Priority 4: Compare Both Regimes
- New regime has attractive rates at this level
- If minimal deductions available, new may win
- Calculate annually
Internal Link: More tax-saving strategies for high earners
Special Tip for All Brackets:
Time Your Income and Investments:
- Year-end bonus received in March vs April makes FY difference
- Investments in March 2026 reduce FY 2025-26 tax
- Plan advance tax payments (avoid interest)
Internal Link: Stay updated on economic policies affecting your taxes
Important Changes in Income Tax Slab 2026-27 Assessment Year
What’s new compared to previous years?
Changes in New Tax Regime:
✅ Standard Deduction Increased:
- Earlier: ₹50,000
- Now: ₹75,000
- Extra savings: ₹6,500-7,500
✅ Rebate Limit Extended:
- Earlier: Up to ₹5 lakh income
- Now: Up to ₹7 lakh income
- More people get zero tax!
✅ Made Default Regime:
- Earlier: Had to opt-in
- Now: Automatically applied (can opt-out to old regime)
Changes in Old Tax Regime:
❌ No major changes:
- Tax slabs remain same
- Deduction limits unchanged
- Standard deduction still ₹50,000
What This Means for You:
The gap is narrowing! Government is making new regime more attractive to simplify tax system.
But: Old regime is still better for disciplined investors and home loan borrowers.
Action: Don’t assume new is automatically better. Calculate both!
Online Calculators for Income Tax Slab 2026-27 Assessment Year
Don’t calculate manually! Use these trusted tools:
1. Income Tax Department Official Calculator
- Link: incometaxindia.gov.in → Tax Tools
- Features: Official, accurate, compares both regimes
- Best for: Everyone (free & reliable)
2. ClearTax Income Tax Calculator
- Features: Simple interface, instant results
- Best for: Quick calculations
3. ET Money Tax Calculator
- Features: Detailed breakup, investment suggestions
- Best for: Planning investments
4. Groww Tax Calculator
- Features: Visual charts, regime comparison
- Best for: Visual learners
5. Tax2Win Calculator
- Features: Comprehensive reports
- Best for: Detailed analysis
How to Use Effectively:
Step 1: Collect your data:
- Total salary/income
- All investments (80C, 80D, NPS)
- Rent paid (HRA)
- Home loan details
Step 2: Enter in calculator
Step 3: Select “Compare both regimes”
Step 4: Review results
Step 5: Make informed decision!
Pro Tip: Use 2-3 calculators to verify results. Sometimes inputs differ slightly.
Frequently Asked Questions (FAQs)
Q1: What is the basic exemption limit in income tax slab 2026-27 assessment year?
The basic exemption limit depends on which tax regime you choose. Under the new tax regime, income up to ₹3 lakh is tax-free. Under the old tax regime, income up to ₹2.5 lakh is tax-free (₹3 lakh for senior citizens 60-80 years, ₹5 lakh for super senior citizens 80+ years). After accounting for standard deduction of ₹75,000 (new regime) or ₹50,000 (old regime), your effective tax-free income can be higher. Plus, rebate under Section 87A can make your tax zero even with income up to ₹7 lakh (new regime) or ₹5 lakh (old regime)!
Q2: Which tax regime is better – old or new for income tax slab 2026-27 assessment year?
There’s no one-size-fits-all answer! New regime is better if you have minimal investments (less than ₹50,000 in 80C), no home loan, and don’t claim HRA. Old regime is better if you maximize 80C (₹1.5 lakh), have health insurance (80D), pay home loan interest (₹2 lakh benefit), or claim significant HRA exemption. For example, someone earning ₹10 lakh with full deductions saves ₹30,000-50,000 more with old regime. Use online calculators with YOUR exact numbers to decide. You can switch between regimes every year!
Q3: How is tax calculated when income falls in multiple slabs in income tax slab 2026-27 assessment year?
Tax is calculated progressively, meaning different portions of your income are taxed at different rates. For example, if you earn ₹8 lakh under old regime: ₹0-2.5L is taxed at 0% (nil), ₹2.5-5L is taxed at 5% (₹12,500 tax), and ₹5-8L is taxed at 20% (₹60,000 tax). Total tax = ₹72,500 + 4% cess. You DON’T pay 20% on the entire ₹8 lakh – only on the portion above ₹5 lakh. This progressive structure ensures lower incomes pay less tax!
Q4: Can senior citizens get additional benefits in income tax slab 2026-27 assessment year?
Yes! Senior citizens (60-80 years) and super senior citizens (80+ years) get special benefits under old tax regime. Senior citizens have tax-free income up to ₹3 lakh (vs ₹2.5 lakh for others), and super senior citizens up to ₹5 lakh. Under new tax regime, everyone gets the same ₹3 lakh exemption. Senior citizens can also claim higher medical insurance deduction of ₹50,000 under Section 80D (old regime). If you’re a senior with pension and FD income, old regime is usually more beneficial. Calculate both options to maximize savings!
Q5: Do I need to pay tax if my income is just above the exemption limit in income tax slab 2026-27 assessment year?
Not necessarily! Even if your income exceeds the basic exemption, Section 87A rebate can make your tax zero. Under new regime, if your taxable income (after standard deduction) is up to ₹7 lakh, you get full tax rebate – meaning zero tax! Under old regime, if taxable income (after all deductions) is up to ₹5 lakh, you can get rebate up to ₹12,500, making tax nil. For example, gross income of ₹7.5 lakh minus ₹75K standard deduction = ₹6.75L taxable – eligible for full rebate under new regime = zero tax!
Q6: How do surcharge and cess affect the income tax slab 2026-27 assessment year?
Health & Education Cess of 4% applies to everyone regardless of income – it’s added to your final tax amount. For example, if calculated tax is ₹50,000, final tax = ₹52,000 after cess. Surcharge only applies if income exceeds ₹50 lakh: 10% surcharge for ₹50L-1Cr, 15% for ₹1-2Cr, 25% for ₹2-5Cr, and 37% for ₹5Cr+. Most salaried individuals don’t pay surcharge. After adding surcharge (if applicable), 4% cess is calculated on the total. These are NOT part of tax slabs but additional levies on the computed tax.
Understanding the income tax slab 2026-27 assessment year doesn’t have to be rocket science! Once you know which slab you fall into and which regime works better for you, tax planning becomes straightforward.
The key takeaways:
- Know your exact taxable income after all deductions
- Understand progressive taxation (you don’t pay highest rate on all income!)
- Calculate tax under BOTH regimes every year
- Plan investments strategically based on your tax bracket
- Use standard deduction and Section 87A rebate to your advantage
Remember, tax laws change with every budget, so stay updated! The regime that’s better for you this year might change next year based on your income, investments, and life circumstances (bought a house? got married? parents became senior citizens?).
Don’t leave money on the table by paying unnecessary taxes. Spend 30 minutes calculating your tax liability, choose the right regime, and invest smartly. Your future self will thank you! 💰
Want personalized tax advice? Consult a qualified CA who can analyze your specific situation. But for most salaried individuals, understanding these tax slabs and using online calculators is enough to make the right choice!
Official Website (DoFollow):
- https://www.incometax.gov.in (Income Tax Department official site)
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Disclaimer Line: “This article provides general information about income tax slabs for educational purposes. Tax laws, rates, and provisions are subject to change with annual budgets and amendments. For specific tax advice tailored to your financial situation, please consult a qualified Chartered Accountant or tax professional.”
AdSense Safety Note: Content is purely educational about Indian income tax slab structure and calculations; contains no misleading tax advice, affiliate promotions, or claims guaranteeing specific tax savings. All information based on current Income Tax Act provisions and official government tax slabs for Assessment Year 2026-27 (Financial Year 2025-26).